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Informist, Thursday, Jul. 31, 2025

 

--PNB ED: Aim to raise INR 10 bln via stake sale in Canara HSBC Life's IPO

--CONTEXT: PNB ED Kalyan Kumar's comments in interaction with Informist

--PNB ED: Expect operating profit to improve in Jul-Sept

--PNB ED: No plans to list PNB MetLife right now, may explore in future

--PNB ED: Don't expect RBI's MPC to lower repo rate at August meeting

By Priyasmita Dutta and Shubham Rana

 

NEW DELHI – State-owned Punjab National Bank hopes to raise around INR 9 billion–INR 10 billion by selling 10% stake in Canara HSBC Life Insurance through an offer for sale when the life insurer launches its initial public offering, the bank's Executive Director Kalyan Kumar said. "The exact fund (unlocked) will depend upon the market conditions when the insurer lists but approximately, it can be anywhere between INR 9 billion to INR 10 billion," Kumar told Informist. 

 

In April, Canara HSBC Life Insurance had filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offering. The insurance company is likely to launch its IPO in the December quarter, PNB's Managing Director and Chief Executive Officer Ashok Chandra had told Informist last month. 

 

Canara HSBC Life Insurance, which was incorporated in 2007, is a joint venture between Canara Bank, which holds 51% stake, and HSBC Insurance (Asia Pacific) Holdings Ltd., which holds 26%. PNB holds the remaining 23% in Canara HSBC Life Insurance. PNB's stake in the insurer was originally held by Oriental Bank of Commerce until it merged with its larger peer in 2020. Even after the 10% stake sale, PNB will retain 13% stake in Canara HSBC Life. At 1018 IST, shares of Punjab National Bank were at INR 104.29 on the National Stock Exchange, down 3.5%. 

 

Speaking about the bank's other subsidiary – PNB MetLife India Insurance Co. Ltd. – Kumar said currently, there were no plans to list it, although it was a "plan that can be explored in the future". In 2011, MetLife India had launched bancassurance in partnership with PNB and in 2013, the latter acquired 30% stake in MetLife India Insurance Co. Ltd., making it PNB MetLife India Insurance Co.

 

Kumar was speaking after the second-largest public sector bank released its financial results for the June quarter Wednesday. Its net profit almost halved from a year ago as it incurred a one-time charge of INR 33.24 billion because it opted for the lower tax regime. If one were to exclude this one-time cost, the net profit of the bank would have been up 50% on year. The bank's net profit for the quarter fell to INR 16.75 billion, down 63% sequentially. In the current financial year, PNB expects to save around INR 7 billion every quarter because of the shift to the lower tax regime, Chandra said in a conference call with analysts. 

 

Kumar told Informist that PNB expects its operating profit to be better in the September quarter compared to the June quarter, given how seasonally "lean" the first quarter typically is. "In the second quarter, usually there is deployment and other activities also pick up," he said. "So, we are quite hopeful that our operating profitability would be better." In the quarter ended June, the bank's operating profit was up 7.6% on year at INR 70.81 billion. 

 

Besides better business operations, Kumar said repricing of term deposits in the September quarter to a lower interest rate would also be advantageous from the bank's perspective. Banks have started reducing their deposit rates following the 100 basis points of reduction in the policy repo rate effected so far in 2025 by the Reserve Bank of India's Monetary Policy Committee. The bank's cost of deposits was 5.33% in the June quarter, marginally lower than 5.36% in the trailing quarter but significantly higher than 5.10% in the year-ago quarter. Kumar said that irrespective of the benign outlook on inflation, he does not expect the central bank's Monetary Policy Committee to cut the repo rate at the policy meeting next week. 

 

Given the interest rate scenario, Kumar said the bank continues to have a "bright" outlook on its treasury income for the September quarter as well as for the full year. PNB's treasury income nearly tripled on year to INR 18.16 billion in the June quarter. "We are quite hopeful that treasury income is going to support our bottom line at least this year," he said.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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